AUDIT REPORT 

Audit of the Nuclear Regulatory Commission’s 

USAID-Funded Activities 

OIG-08-A-12 July 15, 2008 

All publicly available OIG reports (including this report) are accessible through 

NRC’s Web site at: 

http:/www.nrc.gov/reading-rm/doc-collections/insp-gen/ 
UNITED STATES 

NUCLEAR REGULATORY COMMISSION 

WASHINGTON, D.C. 20555-0001 

OFFICE OF THE 

INSPECTOR GENERAL 

 July 15, 2008 

MEMORANDUM TO: R. William Borchardt 

Executive Director for Operations 

 Margaret M. Doane 

Director, Office of International Programs 

FROM: Stephen D. Dingbaum /RA/ 

 Assistant Inspector General for Audits 

SUBJECT: AUDIT OF THE NUCLEAR REGULATORY COMMISSION’S 

USAID-FUNDED ACTIVITIES (OIG-08-A-12) 

Attached is the Office of the Inspector General’s (OIG) audit report titled, Audit of the 

Nuclear Regulatory Commission’s (NRC’s) USAID-Funded Activities.

The report presents the results of the subject audit. Agency comments provided at the 

April 24, 2008, exit conference and on May 30, 2008, have been incorporated, as 

appropriate, into this report. No changes were made to the report based on the 

agency’s July 2, 2008, formal comments (see Appendix C). 

Appendix C provides information on actions taken or planned on each of the audit report 

recommendations. Corrective actions taken or planned are subject to OIG followup as 

stated in Management Directive 6.1. 

We appreciate the cooperation extended to us by members of your staff during the 

audit. If you have any questions or comments about our report, please contact me at 

415-5915 or Steven Zane, Team Leader, Financial and Administrative Audit Team, at 

415-5912. 

Attachment: As stated 
Electronic Distribution

Frank P. Gillespie, Executive Director, Advisory Committee on Reactor 

 Safeguards/Advisory Committee on Nuclear Waste 

E. Roy Hawkens, Chief Administrative Judge, Atomic Safety and 

 Licensing Board Panel 

Karen D. Cyr, General Counsel 

John F. Cordes, Jr., Director, Office of Commission Appellate Adjudication 

Jim E. Dyer, Chief Financial Officer 

Rebecca L. Schmidt, Director, Office of Congressional Affairs 

Eliot B. Brenner, Director, Office of Public Affairs 

Annette Vietti-Cook, Secretary of the Commission 

Bruce S. Mallett, Deputy Executive Director for Reactor 

 and Preparedness Programs, OEDO 

Martin J. Virgilio, Deputy Executive Director for Materials, Waste, Research, 

 State, Tribal, and Compliance Programs, OEDO 

Darren B. Ash, Deputy Executive Director for Information Services 

 and Chief Information Officer, OEDO 

Vonna L. Ordaz, Assistant for Operations, OEDO 

Timothy F. Hagan, Director, Office of Administration 

Cynthia A. Carpenter, Director, Office of Enforcement 

Charles L. Miller, Director, Office of Federal and State Materials 

 and Environmental Management Programs 

Guy P. Caputo, Director, Office of Investigations 

Thomas M. Boyce, Director, Office of Information Services 

James F. McDermott, Director, Office of Human Resources 

Michael R. Johnson, Director, Office of New Reactors 

Michael F. Weber, Director, Office of Nuclear Material Safety and Safeguards 

Eric J. Leeds, Director, Office of Nuclear Reactor Regulation 

Brian W. Sheron, Director, Office of Nuclear Regulatory Research 

Corenthis B. Kelley, Director, Office of Small Business and Civil Rights 

Roy P. Zimmerman, Director, Office of Nuclear Security and Incident Response 

Samuel J. Collins, Regional Administrator, Region I 

Luis A. Reyes, Regional Administrator, Region II 

James L. Caldwell, Regional Administrator, Region III 

Elmo E. Collins, Jr., Regional Administrator, Region IV 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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EXECUTIVE SUMMARY 

BACKGROUND

The Foreign Assistance Act of 1961, as amended, and the Freedom 

Support Act (FSA) contain the funding authority to provide nuclear 

regulatory assistance to countries of the former Soviet Union (FSU). The 

Foreign Operations, Export Financing, and Related Programs 

Appropriations Act, 2006, section 509(c), requires the Office of the 

Inspector General (OIG) to perform periodic program and financial audits 

for the agency receiving the transfer or allocation of U.S. Agency for 

International Development (USAID) funds. The Nuclear Regulatory 

Commission (NRC) uses both USAID funds1 and NRC appropriated funds 

to provide international nuclear regulatory assistance to FSU countries. 

This report presents the results of OIG’s audit of NRC’s use of USAID 

funds (exclusive of NRC appropriated funds). 

 For fiscal years (FY) 1992 through 2007, USAID provided the NRC 

approximately $53,315,000 in FSA funding for assistance programs to 

improve near-term safety of Soviet designed reactors and enhance 

regulatory oversight of radioactive sources in Armenia, Georgia, 

Kazakhstan, Russia, and Ukraine. NRC’s Office of International Programs 

(OIP) is responsible for administering NRC’s USAID-funded program. 

PURPOSE

The objectives of this audit were to evaluate whether: 

1. NRC's corrective actions resulting from OIG’s recommendations in 

Audit Report OIG-02-A-04, dated December 3, 2001, are being 

adequately implemented. 

2. NRC’s management controls over the use of USAID funds are 

adequate. 

RESULTS IN BRIEF

NRC's corrective actions resulting from the previous OIG audit of USAIDfunded activities have been either adequately implemented or are no 

 

1

 For purposes of this report, OIG uses the terms USAID funds and FSA funds interchangeably. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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longer applicable. However, opportunities exist to improve NRC’s 

management controls over the use of USAID funds. Specifically, NRC: 

• Miscategorized USAID funds in NRC’s accounting records, and 

• Did not process Intragovernmental Payment and Collection 

transactions within the required timeframe. 

RECOMMENDATION

This report makes recommendations to improve NRC’s management 

controls over the use of FSA funds. A consolidated list of these 

recommendations appears in Section IV of this report. 

AGENCY COMMENTS

At an April 24, 2008, exit conference, agency senior executives agreed to 

provide suggested revisions to the discussion draft report for OIG’s 

consideration. On May 30, 2008, NRC provided suggested report 

revisions, which served as a basis for further discussions between the 

agency and OIG. This final report incorporates revisions made, where 

appropriate, as a result the agency’s suggestions. 

On July 2, 2008, the Director, OIP, provided a formal response to this 

report (Appendix C). No changes were made to the report, based on the 

agency’s formal response. OIG’s response to the agency’s formal 

comments is presented as Appendix D. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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ABBREVIATIONS AND ACRONYMS 

AdSTM Advanced Systems Technology and Management, 

Inc. 

DOE U.S. Department of Energy 

FSA Freedom Support Act 

FSU former Soviet Union 

GAO U.S. Government Accountability Office 

FY fiscal year 

IPAC Intragovernmental Payment and Collection 

MD Management Directive and Handbook 

MOA Memorandum of Agreement 

NRC U.S. Nuclear Regulatory Commission 

OCFO Office of the Chief Financial Officer 

OIG Office of the Inspector General 

OIP Office of International Programs 

USAID U.S. Agency for International Development 
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Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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TABLE OF CONTENTS 

EXECUTIVE SUMMARY....................................................................................i 

ABBREVIATIONS AND ACRONYMS ..............................................................iii 

I. BACKGROUND ....................................................................................... 1 

II. PURPOSE................................................................................................ 4 

III. FINDINGS................................................................................................ 5 

 A. MISCATEGORIZATION OF USAID FUNDS............................................... 5 

 B. UNTIMELY TRANSACTION PROCESSING .............................................. 11 

IV. CONSOLIDATED LIST OF RECOMMENDATIONS .............................. 14 

APPENDICES 

A. SCOPE AND METHODOLOGY ............................................................... 15 

B. PRIOR AUDIT REPORT RECOMMENDATIONS..................................... 17 

C. FORMAL AGENCY COMMENTS............................................................. 19 

D. OIG RESPONSE TO FORMAL AGENCY COMMENTS........................... 21 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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I. BACKGROUND 

 

 The Foreign Assistance Act of 1961, as amended, and the FSA 

contain the funding authority to provide nuclear regulatory 

assistance to countries of the FSU. The Foreign Operations, 

Export Financing, and Related Programs Appropriations Act, 

2006, section 509(c), requires OIG to perform periodic program 

and financial audits for the agency receiving the transfer or 

allocation of USAID funds. NRC uses both USAID funds2

 and 

NRC appropriated funds to provide international nuclear 

regulatory assistance to FSU countries. This report presents 

the results of OIG’s audit of NRC’s use of USAID funds 

(exclusive of NRC appropriated funds). 

 For FY 1992 through 2007, USAID provided NRC approximately 

$53,315,000 in FSA funding for assistance programs for 

Armenia, Georgia, Kazakhstan, Russia, and Ukraine. Figure 1 

highlights the FSU countries receiving FSA funds from NRC. 

 

Figure 1: Map highlights former Soviet Union countries that receive 

FSA funds from NRC.

 

2

 For purposes of this report, OIG uses the terms USAID funds and FSA funds 

interchangeably. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Figure 2 indicates the breakdown of FSA funding by country, as 

provided by NRC. 

 Figure 2: FSA Funds FY 1992 - FY 2007 

An objective of these assistance programs is to improve nearterm safety of Soviet-designed reactors and enhance regulatory 

oversight of radioactive sources in Armenia, Georgia, 

Kazakhstan, Russia, and Ukraine. FSA funds use includes: 

• Development of source databases, 

• Radiation safety standards training, 

• Design certification training, 

• Decommissioning of Soviet-designed nuclear plants, and 

• Protection of nuclear materials. 

FSA Support to NRC 

Fiscal Years 1992 Through 2007 Funds

 (Dollars in Thousands)

Armenia, 

$6,965 

Georgia, $220

Kazakhstan, 

$7,020 

Russia, 

$17,527 

Ukraine, 

$21,583 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Program Administration 

NRC’s OIP is responsible for 

administering NRC’s USAIDfunded program. OIP is 

composed of approximately 31 

personnel and is headed by a 

Director who reports to the 

NRC Commission. The 

International Cooperation and 

Assistance Branch, one of two 

branches within OIP, has 

responsibility for facilitating the 

agency’s nuclear regulatory 

assistance to the countries of 

the FSU, and has dedicated 

two full time equivalents to 

accomplish this effort.3

 Two 

OIP staff serve as project 

managers of the following 

agreements for NRC’s assistance: 

• One commercial contract with Advanced Systems 

Technology and Management, Inc. (AdSTM),4 and 

• Three Department of Energy (DOE) laboratory agreements.5

 

3

 OIP plans to devote additional resources to the USAID-funded program. Due to a retirement 

during the audit period, one position was unfilled for 3 months. 

4

 The contract NRC-08-07418, effective January 11, 2007, requires, for example, that AdSTM 

assist in developing country specific long-term plans which focus primarily on providing 

assistance to (1) develop country specific national registries of radioactive sources, and(2) 

establish laws and regulations to regulate and control the sources. 5

 The DOE laboratory agreements include one agreement with Brookhaven National 

Laboratory, Support to Russian Federal Nuclear and Radiation Safety Authority, July 22, 

2002; one agreement with Brookhaven National Laboratory, Support to State Nuclear 

Regulatory Committee of Ukraine, May 31, 2001; and one agreement with Pacific Northwest 

National Laboratory, Technical Support for the Ukrainian Nuclear Regulatory 

Administration/State Scientific and Technical Center, May 25, 1999. These three laboratory 

agreements each have a current expiration date of September 2008. 

Chernobyl Nuclear Power Plant, Ukraine 

Source: Vadim Mouchkin / International Atomic Energy Agency 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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II. PURPOSE 

The audit objectives were to evaluate whether: 

1. NRC's corrective actions resulting from OIG’s 

recommendations in Audit Report OIG-02-A-04, dated 

December 3, 2001, are being adequately implemented. 

2. NRC’s management controls over the use of USAID funds 

are adequate. 

See Appendix A for a description of the audit scope and 

methodology. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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III. FINDINGS 

NRC's corrective actions resulting from the previous OIG audit 

of USAID-funded activities have been either adequately 

implemented or are no longer applicable. (See Appendix B for a 

list of the prior OIG audit report recommendations.) However, 

opportunities exist to improve NRC’s management controls over 

the use of USAID funds. Specifically, NRC: 

• Miscategorized USAID funds in NRC’s accounting records, 

and 

• Did not process Intragovernmental Payment and Collection 

transactions within the required timeframe. 

A. MISCATEGORIZATION OF USAID FUNDS 

While the Memoranda of Agreement (MOAs) between USAID 

and NRC specify the dollar amounts allocated to each of five 

FSU countries, the methodology used by NRC to pay individual 

AdSTM contract invoices resulted in a miscategorization of 

approximately $154,000 of FSA funds on the agency’s official 

accounting records for the audit period. This condition is the 

result of inadequate contract provisions, noncompliance with 

agency policy, and undocumented and incorrect office 

procedures. Unless corrected, this payment practice could 

result in NRC overspending the FSA amounts allocated by 

USAID to specific countries. 

Memoranda of Agreement Requirements 

The MOAs between USAID and NRC require that FSA funds 

allocated to NRC be used to improve near-term safety of Sovietdesigned nuclear reactors and enhance regulatory oversight of 

radioactive sources in Armenia, Georgia, Kazakhstan, Russia, 

and Ukraine. Annually, the MOAs allocate a certain dollar 

amount of funds to each country. FY 2006 FSA funds in the 

amount of $2,015,000 were allocated as shown in Figure 3 

below: 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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COUNTRY FSA FUNDS ALLOCATED IN FY 2006 

Armenia $500,000 

Georgia $120,000 

Kazakhstan $400,000 

Russia $500,000 

Ukraine $495,000 

Figure 3: FY 2006 Fund Allocation for FSA Funds Per MOAs Between USAID 

and NRC 

Upon receipt of the FSA funds, NRC assigns each country 

separate accounting job codes within the agency’s accounting 

system. This assignment of accounting codes is in accordance 

with Federal accounting rules,6

 which require budget integrity 

(spending in accordance with legal authority) and accurate 

accounting to determine operating performance (how much 

programs cost).

Payment of Contractor Invoices 

NRC entered into its new contract with AdSTM in January 2007. 

AdSTM performs work in several countries on behalf of NRC, 

including, but not limited to, the countries that are specified in 

the MOAs. As of September 2007, AdSTM submitted four 

invoices that were paid using FSA funds. Each of these four 

invoices reflects work performed in four of the five countries7

specified in the MOAs and in five8

 other countries (See Figure 

4). While the contractor’s invoices are for work performed in the 

nine countries, the invoices do not discretely identify the costs 

associated with the work performed in each individual country. 

Since there is a lack of detailed invoice documentation, OIG 

requested that the OIP project manager separate the costs, by 

country, for each invoice submitted under the new contract, 

through September 2007. The OIP project manager provided 

this information (see Figure 4, section labeled, “Project Manager 

Estimate of Work Performed by Country”), but stated that 

 

6

 Federal Accounting Standards Advisory Board, Federal Accounting Concepts and 

Standards, December 31, 1996. 7

 The four countries specified in the MOAs where the contractor performed work are: 

(1) Armenia, (2) Georgia, (3) Kazakhstan, and (4) Ukraine. No work was performed in 

Russia. 

8

 The five other countries not specified in the MOAs, but where the contractor performed work 

are (1) Azerbaijan, (2) Kyrgyzstan, (3) Moldova, (4) Tajikistan, and (5) Uzbekistan. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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certain costs were based upon estimates, using information 

provided in each invoice, of how much time contractor 

personnel spent working on country-specific issues. 

Of the four invoices submitted by AdSTM and paid using FSA 

funds, NRC paid one invoice using FSA funds allocated to 

Armenia, one invoice using FSA funds allocated to Georgia, and 

two invoices using FSA funds allocated to Kazakhstan. 

Therefore, for each of the four individual invoices, FSA funds 

allocated to a specific FSU country were used to pay for 

contractor work performed in that country, and were also used 

to pay for contractor work performed in: 

• Other countries specified in the MOAs (which have their 

own allocation of FSA funds), and 

• Countries not specified in the MOAs. 

The complete details of this miscategorization are shown in 

Figure 4 below. 

Figure 4: Miscategorization of FSA Funds 

Total All

Armenia Georgia Kazakhstan Ukraine Azerbaijan Kyrgyzstan Moldova Tajikistan Uzbekistan Columns

 Project Manager

 Estimate of Work 

 Performed by Country

Invoice Number 8

17-0109-02 40,647 $ 6,792 28,114 784 261 8,209 3,415 2,614 784 91,623 

17-0109-03 12,517 6,766 30,218 794 265 10,255 2,648 2,648 794 66,906 

17-0109-05 11,989 6,914 25,937 29,699 1,839 2,360 19,056 2,419 726 100,940 

17-0109-06 9,103 13,853 40,653 29,911 313 2,501 11,101 3,127 17,199 127,761 

 Total (A) 74,257 34,325 124,922 61,189 2,678 23,326 36,220 10,808 19,504 387,230 

 FSA Funds Used 

 to Pay Invoice

Invoice Number 8

17-0109-02 91,623 - - - - - - - - 91,623 

17-0109-03 - 66,906 - - - - - - - 66,906 

17-0109-05 - - 100,940 - - - - - - 100,940 

17-0109-06 - - 127,761 - - - - - - 127,761 

 Total (B) 91,623 66,906 228,701 - - - - - - 387,230 

 Overcharged (B-A) 9 32,581 17,365 103,779 153,725

 Undercharged (B-A) 10 (2,678) (61,189) (23,326) (36,220) (10,808) (19,504) (153,725) 

 Countries not specified in the

 Memoranda of Agreement with USAID (2,678) (23,326) (36,220) (10,808) (19,504) (92,536) 

8

 Since the first and fourth contractor invoices were paid using NRC funds rather than FSA funds, they are not included in Figure 4, which reflects FSA funds only. 9 Overcharges represent FSA funds allocated to a country that were spent in excess of the cost of the contractor work performed for that country.

10 Undercharges represent contractor work performed for a country paid with FSA funds that were allocated to other countries.

Countries Specified in the Countries Not Specified in the

Memoranda of Agreement with USAID Memoranda of Agreement with USAID
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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The miscategorization of approximately $154,000 of FSA funds 

results in a lack of compliance with Federal accounting rules. 

OIG notes that the OIP project manager responsible for this 

contract tracks the FSA funds in a file separate from the 

agency’s official accounting records. This document is stored 

on the project manager’s personal computer hard drive and is 

rarely accessed by anyone other than him. Reportedly, in 

December 2007, a new contract manager for Assistance 

Programs was hired and this information is now on a password 

protected shared drive folder. 

Reasons for Miscategorization 

The miscategorization of FSA funds results from inadequate 

contract provisions, noncompliance with agency policy, and 

undocumented and incorrect office procedures. 

Inadequate Contract Provisions 

The billing instructions included in the AdSTM contract do not 

require the contractor to specify the costs by country. However, 

because the FSA funds are transferred to NRC with prescribed 

dollar amounts allocated to each specifically named country, it is 

essential to separate the invoice costs by country so that FSA 

funds are used in accordance with the MOAs. 

Noncompliance with Agency Policy 

 

OIP miscategorized FSA funds because it did not follow agency 

policy during the fulfillment of its funds control responsibilities. 

Furthermore, OIP managers have not performed the 

supervisory responsibilities needed to ensure that project 

managers have followed agency policy. Management Directive 

and Handbook 4.2, Administrative Control of Funds (MD 4.2), 

contains agency policy that assigns allowance holders the 

responsibility for ensuring that allocated funds are expended for 

the purposes for which they were appropriated as reflected in 

the current allowances and financial plans. Adherence to this 

funds control policy and supervisory attention are required 

measures that could have prevented this miscategorization. 

 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Undocumented and Incorrect Office Procedures 

OIP does not currently have official documented office 

procedures explaining how to correctly process contractor 

invoices. Such office specific procedures are needed because 

the use of FSA funds and the requirement to identify contract 

costs by country are functions unique to OIP. NRC offices, 

including smaller offices, have established office instructions 

intended to facilitate staff compliance with higher level 

requirements such as statutes, regulations, Federal standards, 

and agency policy. Procedures stated in an office instruction 

should be followed in order to benefit from previous lessons 

learned, achieve compliance with applicable requirements, and 

improve efficiency and consistency. 

OIP is developing office procedures expected to provide 

guidance on completing OIP tasks and activities. OIP drafted 

an office level Desk Officers Handbook that OIP management 

said is expected to contain an appendix with procedures that 

address the use of funds, including FSA funds allocated by 

USAID and NRC appropriated funds. 

Accounting Impact 

 

The above described process used by NRC to pay AdSTM’s 

invoices has resulted in a miscategorization of FSA funds in 

NRC’s official accounting records in the amount of $153,725 

(see Figure 4). The $153,725 miscategorization of FSA funds 

includes $92,536 used to pay the contractor for work performed 

in countries not specified in the MOAs. The difference of 

$61,189 reflects contractor work performed for Ukraine, but paid 

out of FSA funds for Armenia, Georgia, and Kazakhstan. 

In addition, the current contractor payment practice could result 

in NRC overspending the amounts allocated by USAID to 

specific countries. Requiring the contractor to prepare invoices 

that identify contract costs by country would facilitate proper 

invoice processing and accounting to include the correct use of 

FSA funds. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Recommendations

OIG recommends that the Director, OIP, in coordination with 

other appropriate offices: 

1. Modify the Advanced Systems Technology and 

Management, Inc., contract to require invoices to identify 

contract costs by country. 

2. Correct accounting records applicable to the Advanced 

Systems Technology and Management, Inc., contract. 

3. Develop and implement written office procedures for the 

U.S. Agency for International Development funded 

program to include guidance on contract payments and 

associated quality controls involving supervisory review. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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B. UNTIMELY TRANSACTION PROCESSING 

 

U.S. Government Accountability Office (GAO) and agency 

policy require that management provide timely review and 

approval of transactions. However, OIP did not process DOE 

laboratory agreement transactions within the required 

timeframe. The laboratory agreement transactions were not 

processed timely because OIP is not following existing agency 

policy and lacks quality controls involving supervisory review. 

Without adherence to agency policy and quality controls 

regarding OIP’s transaction processing, the potential for 

improper payments is increased.

Intragovernmental Payment and Collection Approval

Requirements 

The GAO11 publication, Standards for Internal Control in the 

Federal Government, requires timely review and approval of 

transactions to ensure accuracy and validity of records. NRC 

implements this internal control standard through agency 

requirements contained in Management Directive and 

Handbook 11.7, NRC Procedures for Placement and Monitoring 

of Work with the U S. Department of Energy (DOE) (MD 11.7). 

MD 11.7 requires that DOE lab agreement project managers 

sign and return the “Approval for Interagency Billing – DOE” 

form within 20 calendar days from the date on the forwarding 

memorandum from the Office of the Chief Financial Officer 

(OCFO) that transmits the voucher backup material. 

The Intragovernmental Payment and Collection (IPAC) 

transaction is processed using the NRC Approval Form for 

Interagency Billing that OCFO generates from the agency’s 

financial accounting system. In accordance with MD 11.7, 

project managers are required to process and return the NRC 

Approval Form for Interagency Billing to OCFO within the 

required timeframe. 

Untimely IPAC Approvals 

OIP did not approve IPAC transaction documentation within the 

required timeframe. OIG reviewed 10 IPACs for work that 

Brookhaven National Laboratory conducted between May 2007 

and August 2007 for assistance activities to Russia. OIG found 

that OIP did not approve and return to OCFO any of the IPACs 

 

11 In November 1999, when this guidance was written, GAO's legal name was the General 

Accounting Office. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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within the required 20 calendar day timeframe. Furthermore, 

these 10 IPACs were past due by an average of 76 days. 

Figure 5 below shows an aging chart for the sample of IPACs 

reviewed. 

Timeliness of IPAC Approvals for 

USAID-Funded Activities

0

1

2

3

4

1-30 31-60 61-90 91-120 Over 120

Days Past Due as of October 24, 2007

Number of IPACs

 Figure 5: Aging Chart for the Sample of IPACs Reviewed

Noncompliance with Agency Policy and Lack of Quality 

Controls

OIP did not process the laboratory agreement transactions 

timely because: 

• OIP is not following existing agency policy, and 

• OIP managers do not have quality control procedures 

in place involving review of IPAC transaction 

processing. 

The office procedures OIP is developing are expected to 

provide guidance on completing OIP tasks and activities. OIP 

drafted an office level Desk Officers Handbook that OIP 

management said is expected to contain an appendix with 

procedures for using FSA funds. 

Improper Payment Errors

Without quality control procedures that ensure IPAC 

transactions are processed within required timeframes, OIP 

heightens the potential for improper payment errors that would 

otherwise be discovered during the IPAC review process. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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OIP has experienced IPAC processing errors in the past. For 

example, during the period, December 2004 through December 

2005, four IPAC errors occurred. These errors accounted for 

approximately $23,000 being miscategorized in NRC’s official 

accounting records. Corrected in October 2007, these errors 

could have been prevented if the project manager had adhered 

to the agency’s IPAC processing requirements. 

Recommendations

OIG recommends that the Director, OIP, in coordination with 

other appropriate offices: 

4. Develop and implement quality controls to require 

periodic supervisory review of the timeliness of 

Intragovernmental Payment and Collection transaction 

processing. 

5. Modify OIP supervisor’s and project managers’ 

performance elements, standards, and appraisal (NRC 

Form 412) to include accountability measures for 

following NRC policies regarding Intragovernmental 

Payment and Collection transaction processing and 

funds control. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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IV. CONSOLIDATED LIST OF RECOMMENDATIONS 

OIG recommends that the Director, OIP, in coordination with 

other appropriate offices: 

1. Modify the Advanced Systems Technology and 

Management, Inc., contract to require invoices to identify 

contract costs by country. 

2. Correct accounting records applicable to the Advanced 

Systems Technology and Management, Inc., contract. 

3. Develop and implement written office procedures for the 

U.S. Agency for International Development funded 

program to include guidance on contract payments and 

associated quality controls involving supervisory review. 

4. Develop and implement quality controls to require 

periodic supervisory review of the timeliness of 

Intragovernmental Payment and Collection transaction 

processing. 

5. Modify OIP supervisor’s and project managers’ 

performance elements, standards, and appraisal (NRC 

Form 412) to include accountability measures for 

following NRC policies regarding Intragovernmental 

Payment and Collection transaction processing and 

funds control. 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Appendix A 

SCOPE AND METHODOLOGY

To determine whether NRC has adequate internal controls in 

place to manage the USAID funds, OIG auditors reviewed and 

analyzed pertinent program data, authoritative guidance, and 

prior OIG and GAO reports which focused on the management 

of nuclear safety assistance. 

In addition, OIG conducted interviews with selected NRC 

representatives and officials from the U.S. Department of State 

and USAID to gain an understanding of the program and to 

determine current issues, problems, or known deficiencies. 

Internal controls related to the audit objective were reviewed 

and analyzed. Throughout the audit, auditors were aware of the 

possibility or existence of fraud, waste, or misuse in the 

program. 

We conducted this performance audit in accordance with 

generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis 

for our findings and conclusions based on our audit objectives. 

We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit 

objectives. 

Steven Zane, Team Leader; Vicki Foster, Audit Manager; 

Terri Cooper, Senior Auditor; and Robert Woodward, Auditor, 

conducted this audit from April 2007 to December 2007. We 

performed the audit work at NRC Headquarters in Rockville, 

Maryland. 
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Appendix B 

PRIOR AUDIT REPORT RECOMMENDATIONS 

NRC OIG, Audit of AID-Funded Activities, Report OIG-02-A-04, 

dated December 3, 2001, made five recommendations to 

improve the effectiveness and efficiency of NRC’s USAIDfunded nuclear regulatory assistance program. Specifically, in 

the prior report, OIG recommended that the Director, OIP: 

3⁄4 Develop a process for tracking the status of the program’s 

ongoing projects. 

3⁄4 Issue formal guidance in a Management Directive or other 

appropriate vehicle that clearly sets forth NRC policy, 

procedures, and guidance on implementing agreements. 

3⁄4 Pending issuance of the formal guidance on implementing 

agreements, issue timely interim guidance. 

3⁄4 Convene quarterly project manager counterpart meetings. 

3⁄4 Complete final action on the outstanding Government 

Accountability Office (GAO) recommendation regarding 

strategic planning by November 30, 2001. 
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Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Appendix C 

FORMAL AGENCY COMMENTS 
Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Audit of the Nuclear Regulatory Commission’s USAID-Funded Activities 

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Appendix D 

OIG RESPONSE TO FORMAL AGENCY COMMENTS 

On July 2, 2008, the Director, OIP, provided a formal response 

to this report which expressed full agreement with the report’s 

recommendations. Since our audit scope excluded NRC 

appropriated funds, we cannot comment on the agency’s 

calculations of miscategorized FSA funds which include the use 

of NRC appropriated funds. 

We will review the adequacy of agency corrective actions taken 

during the audit followup process.